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The IPCC Special Report was published in 2019. Its results are extremely alarming and, unfortunately, are confirmed by the subsequent increasingly critical publications on the scenario that is being created. The report depicts a very worrying picture of the consequences of climate change, which would increase by 3.1-3.7°C if current environmental and energy policies were kept unchanged. We could limit the increase to 1.5°C only by reducing global emissions by 40% by 2030. However, this would lead to various negative effects on the climate of our planet, one for all the melting of an important part of the perennial ice.

The European Commission has therefore decided to apply urgent measures to address the ongoing climate crisis, adopting a new strategy to stimulate finance in support of sustainability. The goal is to ensure that the financial system supports climate action and contributes to the achievement of the goals of the Paris Agreement on climate change.

The strategy focuses on three main pillars:

  1. Sustainable finance must be integrated into all EU policies.
  2. The EU must increase its efforts globally.
  3. A European taxonomy for sustainable finance is needed.

To achieve these goals, the European Commission has been working together with the Member States, the European Parliament and other stakeholders since 2018 on a Sustainable Finance Action Plan (SFAP). The European Council adopted the SFAP on 28 May 2019 and it was followed by an implementing act on 21 June 2019 providing details on the implementation of SFAP’s key actions.

Impacts and risks on climate and finance

Climate change is not a distant threat: it is already happening. It cost mankind hundreds of billions of dollars in loss and damage in recent years and, even worse, loss of lives. Unfortunately, the future impacts of climate change will be even more devastating.

The solution is to act promptly on a global level, especially in the field of energy production so that 70-80% of the planet’s needs are generated from renewable sources (see here our mini vertical wind turbine) and the use of coal and lignite gradually decreases towards zero. It will be possible to avoid exceeding the 1.5°C global warming limit only if global CO2 emissions start declining well before 2030.

This taxonomy is intended as a guideline for risk analysts and emergency managers, in order to adopt a more holistic approach in assessing their country’s vulnerability to the impacts of climate change. This provides an overview of all sectors that could be affected by climate change, including man-made infrastructure systems such as buildings, bridges and roads, water management, agriculture and forestry, biodiversity, health systems, human settlements, energy supply networks, industrial processes in the manufacturing industry, transportation systems, up to financial services, telecommunication networks, IT systems, social services such as education and health care, and judicial systems.


Sustainable economy and finance in the European plan

The use of fossil fuels has been decisive for the human development in the last two centuries. However, it has contributed significantly to climate change and environmental degradation of our planet. To address this problem, the European Commission has developed the European Action Plan for Sustainable Finance, which aims to promote sustainable investments, reduce CO2 emissions so as to combat climate change.

By Sustainable Finance we mean the one that contributes to sustainable development in Europe, supporting environmentally friendly projects and sometimes, the companies that invest in them in this direction. The European Action Plan for Sustainable Finance is divided into three pillars:

  • A taxonomy of sustainable finance that defines what it means to be sustainable and how sustainability can be measured.
  • A certification scheme for sustainable financial products.
  • A framework for reporting on progress towards climate goals.

The “Taxonomy of Sustainable Finance” (EU Regulation 2020/85212) was established at the European institutions on 10 March 2021.

It was created to ensure that all investors have the same understanding of what constitutes sustainable finance. It aims to ensure that investment funds, banks and other financial institutions are able to assess the risks associated with unsustainable investments and make more informed decisions about their investments. The taxonomy provides a common language for defining and measuring ESG (Environment, Social & Governance) risk factors in order to increase transparency and encourage responsible investments. This is an important step towards a sustainable future for Europe, as it will enable European companies to make informed decisione about how to invest their capital. The EU thus seeks to promote responsible investments through the promotion of sustainable finance instruments such as green bonds, green loans or asset managers that focus on investing in sustainability.


The European Union has taken a significant step forward in its commitment to promote a new economic model based on sustainability, involving finance. The Commission’s proposal for a Directive on green public procurement, for example, aims to support the transition towards a more sustainable economy with the adoption of new rules for the award of more environmentally friendly and socially responsible public procurement, generating a further booster of change towards sustainability.

In recent years, Europe has joined the United States in presenting new regulations that aim to drastically reduce CO2 emissions in the private sector such as transport and industry so as to favour the use of renewable energy sources in their production processes. These measures are part of a broader plan aimed at financing sustainable growth, within which there is a regulatory framework for financial instruments that can be used to finance private projects related to environmental protection.

For this reason, it is more necessary than ever to focus on innovation and technology when it comes to financing sustainable growth. The European Regulations have clearly expressed this intention by adopting a specific section dedicated to technological innovation and its role in promoting sustainable growth.

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